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May 6, 2009

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Reference ID Created Released Classification Origin
09KYIV758 2009-05-06 14:31 2011-08-30 01:44 CONFIDENTIAL Embassy Kyiv

DE RUEHKV #0758/01 1261431
P 061431Z MAY 09

C O N F I D E N T I A L SECTION 01 OF 03 KYIV 000758 
E.O. 12958: DECL: 04/30/2019 
Classified By: Ambassador William Taylor for reasons 1.4(b,d). 
1. (C) Deputy Secretary Steinberg conveyed the message that 
the Obama Administration strongly supports Ukraine's 
independence and sovereignty in meetings April 26-27 with 
Rada Speaker Lytvyn, former Speaker and presidential 
contender Arseniy Yatsenyuk, opposition Party of Regions 
representatives, and other foreign and security policy 
leaders.  (Meetings with President Yushchenko and PM 
Tymoshenko reported separately.)  The Deputy Secretary also 
underlined the need for Ukraine's leaders to put political 
rivalries aside and take decisive action to address the 
ongoing economic crisis through the IMF program.  Yatsenyuk 
argued that a generational shift in leadership was needed, 
and that he was prepared to lead this new generation. 
Regions representatives criticized Tymoshenko's handling of 
the economic crisis, arguing that either a broad coalition 
between Tymoshenko's BYuT and themselves or early 
Presidential and Parliamentary elections were solutions. 
Speaker Lytvyn stated that only transparent political 
dialogue that put the nation first could place Ukraine back 
on the right track.  At a dinner April 26, the Deputy 
Secretary heard concerns about neo-imperial Russian policy 
toward Ukraine.  End Summary. 
Deputy Secretary's Message 
2. (C) During an April 26-27 visit to Kyiv, Deputy Secretary 
Steinberg stressed in meetings with Rada Speaker Volodymyr 
Lytvyn, presidential contender Arseniy Yatsenyuk and Party of 
Regions representatives that the Obama Administration 
remained committed to Ukraine's security and independence, 
and continued to support Ukraine's Euro-Atlantic aspirations. 
 He noted he was in Kyiv to help set a course for continued 
US-Ukraine cooperation.  The Deputy Secretary said that it 
was time to get past "politics as usual," and that Ukraine's 
leaders must work together to overcome the political and 
economic crises facing the country to lead Ukraine toward a 
prosperous and secure future. 
3. (C) David Lipton, Special Assistant to the President for 
International Economic Affairs, stressed in the meetings that 
Ukraine could not wait to enact needed measures to shore up 
the economy, including budget reform and bank restructuring. 
He said that the hard realities facing Ukraine included 
continued difficulty in the world economy, depressed external 
demand for Ukrainian exports, and capital markets reluctant 
to lend to Ukraine.  Ukraine would have to solve its own 
problems, but would have the help of the IMF, he said. 
Lipton cautioned that bank recapitalization and other 
structural reforms had to be done openly and transparently if 
Ukrainians, and global markets, were to have confidence in 
the process. 
Yatsenyuk: Yes I Can 
4. (C) 34-year-old former Rada Speaker and presidential 
contender Arseniy Yatsenyuk told the Deputy Secretary that 
the time had come for "huge changes" to the political system 
in Ukraine.  He asserted that through his new political 
movement, "Front for Change," he would "create a new 
political elite" that could move beyond the 
"overpersonalized" politics that currently dominate Ukraine. 
He decried the political populism that hindered necessary 
economic reforms, and said that the country should improve 
the current constitution rather than start over with a new 
one.  Yatsenyuk said he wanted to see Ukraine move to a 
parliamentary republic "within five to ten years," rather 
than return to a strong presidential system.  He concluded 
that "everyone is exhausted right now," adding that consensus 
on some of these broad issues could be possible after the 
presidential election. 
5. (C) When asked to comment on Ukraine's external relations, 
Yatsenyuk told the Deputy Secretary that "everything begins 
with the neighbors."  He implicitly criticized Tymoshenko for 
the way she handled the March EU-Ukraine joint statement on 
gas transit modernization, which aggravated Moscow, saying 
that "it is far better to give the Bear treats, than to kick 
it."  Yatsenyuk said Moscow had too much influence in the EU, 
particularly with Germany, France, and Italy and that the 
Russians also kept their influence in Ukraine by maintaining 
"hooks, or concealed relationships" with all Ukrainian 
KYIV 00000758  002 OF 003 
6. (C) Drawing on the Administration's "reset button" theme, 
Yatsenyuk proposed "reshaping" the most controversial issues 
in the Ukrainian-Russian bilateral relationship, namely NATO 
enlargement and Ukrainian nationalism.  Yatsenyuk quietly 
commented that Ukraine would not, however, play second fiddle 
in any relationship between the US and Russia.  Within two to 
three years, Yatsenyuk predicted, the US would realize that 
"Russia will always be Russia" and then progress betwe
en the 
US, Ukraine, and Russia would be possible. 
Lytvyn:  Dialogue and Transparency are Key 
7. (C) Speaker Lytvyn told the Deputy Secretary that Ukraine 
needed the support and cooperation of friends like the US, 
but added that "you (US) can only support those who want it," 
and who help themselves.  Lytvyn said that it was important 
that Ukraine's political leaders unite and create a "culture 
of dialogue" to work for the common good of the country.  He 
added that the ongoing political battle between Yushchenko 
and Tymoshenko prevented necessary reforms and hard 
decisions, such as the package of IMF-related legislation, to 
be taken.  He argued against changing Ukraine's political 
system to "suit the personalities of certain political 
leaders," a reference to rumored negotiations towards a 
BYuT-Regions coalition and ongoing debates over 
constitutional reform.  Ukraine needed "radical measures" to 
regain people's trust in political leaders, said Lytvyn, or 
else "we will have nothing." 
8. (C)  Turning to the economy, Lytvyn stressed that 
necessary economic reforms, including bank restructuring, had 
to be done openly and transparently.  He characterized some 
politicians' recent declarations of political reform as 
attempts to draw attention away from the economic crisis and 
to "distribute power amongst themselves."  Looking longer 
term, Lytvyn argued that Ukraine needed to reform its 
political system to introduce open party electoral lists, 
clearly delineate the powers of the president and prime 
minister, and have local administrations elected, not 
appointed.  The country also must develop an independent 
energy strategy, he said, noting that the current system was 
lucrative for some business clans that continued to prevent 
meaningful change in the energy sector.  Lytvyn concluded 
that the cooperation between Tymoshenko and Yushchenko on 
energy security at the EU conference in Brussels was a step 
in the right direction, but noted that Russia should play a 
role in the energy sector modernization and reform process. 
Regions:  We Know What to Do 
9. (C) Party of Regions deputy faction leader Serhiy 
Lyovochkin criticized Tymoshenko's handling of the economic 
crisis and said that most government Ministers were 
"unprofessional and incompetent."  He told the Deputy 
Secretary that the government had done little to combat the 
economic crisis since the IMF released the first tranche of 
its Stand-By Arrangement.  Lyovochkin criticized the constant 
political battles between Tymoshenko and Yushchenko, saying 
that they were more interested in scoring political points 
against one another than pushing through the reforms needed 
to fix the economy. 
10. (C) Lyovochkin outlined two possible options to overcome 
the current economic crisis and political infighting.  First, 
Regions could unite with Tymoshenko's BYuT faction to create 
a broad Rada coalition.  The coalition could replace many of 
current Ministers with "professionals" and would have the 
votes in the Rada to pass necessary legislation.  The second 
option would be to push for early Rada and Presidential 
elections.  Lyovochkin said that Regions was confident it 
would prevail in both elections and that it would then be 
free to make the changes needed to restore economic stability 
to Ukraine.  He said that there was a strong preference in 
Regions for the second option because it was more democratic 
and "normal." 
11. (C)  At an April 26 dinner hosted by the Ambassador, the 
Deputy Secretary met with senior foreign policy and security 
officials and leading members of the Rada.  A repeated theme 
was concern about neo-imperial Russian policy toward Ukraine. 
 Kostantyn Gryshchenko, Deputy Secretary of the National 
Security and Defense Council and concurrently Ambassador to 
Russia, observed that the attitude in Moscow is that "the US 
KYIV 00000758  003 OF 003 
needs Russia more than Russia needs the US."  If the Obama 
Administration did not take concrete actions to show Russia 
that it could be firm, the situation could become "dangerous" 
for Ukraine.  The Deputy Secretary underlined that the US 
sought better relations with Russia where possible, but not 
at the expense of other interests or commitments.  As for 
concrete actions, he pointed to the Administration's resolve 
to continue to support the holding of NATO exercises in 
Georgia despite vociferous Russian opposition. 
12. (C) Former Foreign Minister Borys Tarasyuk said he 
welcomed the re-start of US relations with Russia, "but not 
at the expense of Ukrainian interests."   Better US relations 
with Russia are good for Ukraine, but the US should reiterate 
to Russia that it must not be "aggressive."   Russia has 
demonstrated its aggressive tendencies not only in Georgia, 
but also in the gas disputes with Ukraine in 2006 and 2009. 
These represented "a serious challenge."  He said that 
Ukraine had to start looking to Iran as a possible 
alternative source of gas, an issue "of great strategic 
13. (C) The Deputy Secretary noted the appointment of 
Ambassador Morningstar, known for his central role in 
promoting the Baku-Ceyhan pipeline, as evidence of the 
Administration's commitment to diversification of gas sources 
and pipeline routes.  We would like to discuss with Iran a 
different future.  Much would be possible if Iran would 
change its policy and end its nuclear enrichment program. 
However, if Iran gets a nuclear weapon, it would spark a 
nuclear arms race and put the region in peril. 
14.  (C) Valentyn Nalivaichenko, head of the Security Service 
of Ukraine, noted that Russian Services are "aggressive" in 
parts of Ukraine, particularly Crimea.  The Russian Embassy 
is financing pro-Russian separatist groups.  Ukraine is 
"nearly" ready to expel the Russian Consul General. 
Gryshchenko highlighted the distorted image of Ukraine in the 
state controlled Russian media - Ukraine is second only to 
the United States as "Great Satan."  Yatsenyuk (also present 
at the dinner in addition to his private meeting) concluded 
that it was impossible to have mutually respectful relations 
with Russia.  The best one could hope for is "predictable" 
relations.  He did not perceive any significant difference 
between Putin and Medvedev: "the interdependence is so great, 
there is no way to split them." 
15. (SBU)  The Deputy Secretary cleared this message. 




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